William McKinley - Economic recovery and foreign affairs

Once he had assumed the responsibilities of office, McKinley immediately
turned his attention to measures for assuring economic recovery. The
tariff received first consideration, and even before his inauguration
McKinley had worked with leaders of the House to secure legislation that
would be acceptable. Nelson Dingley, who chaired the Ways and Means
Committee, submitted a bill that did not drastically raise the duties of
the Wilson-Gorman Tariff of 1894. While it passed the House quickly at the
end of March, the Senate increased the rates, and in its final form it
became the highest tariff in American history. McKinley had reservations,
but he nevertheless signed the bill into law on 24 July 1897. One reason
he did is that the provision for reciprocity trade agreements, though
inadequate, promised an opportunity to bring the United States into an
international economic system from which the world might secure
extraordinary rewards. The distance McKinley had moved from protectionism
to market expansion became apparent during the summer of 1897, when he
told the Cincinnati Commercial Club that in addition to serving economic
ends, good trade ensured goodwill. "It should be our settled
purpose to open trade wherever we can," he argued, "making
our ships and our commerce messengers of peace and amity."

A second measure for economic recovery involved carrying out the
Republican party pledge to secure an international agreement on
bimetallism. McKinley appointed a special commission to secure such an
agreement, but little came of its efforts. England and France committed
themselves to the gold standard, and Japan, Russia, and Germany followed
soon after. Apart from positions taken by other nations, however,
bimetallism quickly became a dead issue. New discoveries of gold in South
Africa, Australia, and Canada brought a dramatic increase in world
supplies and a corresponding decline in gold prices. The demand for silver
quieted as the need for it disappeared. Production curves and indexes of
business activity began to rise during the summer of 1897, and Americans
began to turn their attention to other matters.

Economic trends, ideas, and programs interacted during the late nineteenth
century. Business fluctuations prompted economic theorists, both
professional and amateur, to develop explanations of recurrent crises.
Between 1873 and 1896, monetary theories were often central in the
arguments of economic analysts, but in those same years an alternative
explanatory model attracted increasing attention. That model posited
unlimited industrial and agricultural productivity, on the one hand, and a
limited home market, on the other. Given such conditions, demand would
stagnate while stocks and inventories built up unless American producers
found new outlets beyond the home market. Here was a theory that provided
not only an explanation of the business cycle but a program for action as
well. It was a theory that bypassed controversies over the currency;
bimetallists and monometallists could support trade expansion with equal
enthusiasm.

No one found overproduction and market-expansion ideas more convincing
than did McKinley. In 1895 he had delivered the keynote address to the new
National Association of Manufacturers at its organizational meeting.
"We want our own markets for our manufactures and agricultural
products," he told a receptive audience. "We want a foreign
market for our surplus products.. . . We want a reciprocity which will
give us foreign markets for our surplus products, and in turn that will
open our markets to foreigners for those products which they produce and
which we do not." During McKinley's first presidential year
his new insight into the importance of commercial expansion provided a
frame of reference into which he could fit developments abroad.
Increasingly, foreign affairs demanded his most careful consideration.

The first problem in foreign affairs to attract McKinley's
attention was the annexation of Hawaii, a matter that had troubled his
predecessor. Hoping for American ownership of the islands, sugar growers
there had staged a revolution against Queen Liliuokalani in 1893.
President Harrison had forwarded a treaty of annexation to the Senate, but
Cleveland withdrew it on the grounds that it did not represent the will of
the Hawaiian people. The Republican platform of 1896 had included a plank
favoring annexation, and in December 1897, McKinley advised Congress to
proceed. Troubles in Cuba were exacerbating tensions with Spain, and the
president believed that the need for a base in the Pacific justified
taking the islands. Congress finally passed a joint resolution annexing
Hawaii, and McKinley signed it on 7 July 1898. By that time the United
States was at war with Spain.